An Executive Guide to IFRS: Content, Costs and Benefits to Business

Finance

The funding of the IASB has always been a delicate issue. When it started it was funded by voluntary contributions, $1m each from the (then) Big Five international audit firms, as well as gifts of up to $50,000 from companies and contributions by regulators, banks and others. Some people did not like this on the basis that it meant the IASB was not independent of its donors, even though the IFRS Foundation was there to guarantee that. But at a practical level it was also not very comfortable, and so the Trustees have tried to move to a system where each economy provides a regular contribution.

This has not proved very easy either. While Germany and the UK have provided nearly €1m a year each, other countries such as France have been reluctant to contribute when they disagree with what the IASB is doing and did not want to have to use IFRS anyway. The European Commission has also provided funds since 2010, but this is likely to cause national contributions to be reduced accordingly while providing a pressure point for European interests.

The funding of the IASB has always been a delicate issue

The IASB needs about €25m a year to function. It continues to receive financial support from the Big Four international audit firms (now $2m a year each), from some mid-tier audit firms and from many institutions, but is now tending to spend more than it receives, particularly during the financial crisis, where it has had many extra standard-setting meetings, and many joint meetings ...